While the health crisis and the subsequent economic crisis have caused prices across the world to rise, different countries have found different ways to deal with this phenomenon. In Abu Dhabi, for example, authorities are investing massively in the agro-industry to boost local food production. Sweden and the Netherlands have also been the least affected by the rise in prices while in Saudi Arabia, the VAT has been increased to 15%.
The UAE wants to cut down the cost of living
Abu Dhabi will mostly rely on foreign talent to boost its economy after the crisis. Today, the expat exodus affecting Middle East countries is having a direct impact on their economy. The United Arab Emirates have therefore decided to bet on an affordable cost of living to attract more professionals in the near future. Local authorities are considering the slashing down of prices relating to education, accommodation and entertainment. In addition, they are planning to inject funds into research and innovation in the agro-industry. A budget of $ 100 million has already been earmarked for companies looking to build vertical farms.
It’s worth noting that expensive cities, such as Dubaï and Abu Dhabi, drop down to the 23rd and 39th places respectively in the latest Mercer Cost of Living Ranking.
Hong Kong is the world’s most expensive city in 2020
According to the Mercer report, Hong Kong is now the world’s most expensive city for expats. Surprisingly this year, Ashgabat, the capital of Turkmenistan, comes in second, followed by the legendary Tokyo, Zurich, Singapore, New York, Shanghai, Bern, Geneva and Beijing. Note that the ranking takes into account the prices of more than 200 products and services, including rent, transport, leisure and food, in 400 cities around the world. On the other hand, Tashkent, Bishkek, Windhoek and Tunis are some of the world’s cheapest cities.
Cairo, ranked 126th, is cheaper than Tel Aviv, for example. In Africa, meanwhile, Ndjamena, the capital of Chad, retains attention, while Tunis remains cheaper compared to other major cities.
Europe looks more affordable for expats, mainly because of the eurozone crisis that Italy and France have been facing since the end of 2019. Paris, Milan, as well as Frankfurt, are also much cheaper, according to the report. London, ranking 19th, remains in the top 20 most expensive cities despite the Brexit.
In the Americas, New York remains the most expensive city, followed by San Francisco and Los Angeles. Ottawa, Toronto and Vancouver became more affordable in the past year, like San Juan, San José and Montevideo in South America.
Sweden and the Netherlands the least affected by price changes
According to a recent survey by Ipsos, the prices of food, products and services increased significantly in more than 20 countries during the COVID-19 crisis. Argentina, South Africa, Mexico, Turkey, Chile and Belgium are the countries with the highest rises. Overall, more than half of the respondents believe that the prices of food, groceries and household supplies have increased in recent months.
Most respondents in Turkey, Chile and Malaysia also agree that the utility bills, including water, electricity, heating, air conditioning and telecommunication services, have skyrocketed during the COVID-19 crisis. An increase in the prices of hygiene, health care and leisure products and services was also noted in these countries. On the other hand, one in four respondents in Hungary and South Korea has seen a price drop since the beginning of the crisis. Many respondents in Japan and Russia also feel this way.
In Sweden and the Netherlands, however, nearly half of the respondents believe that prices have remained unchanged — which suggests that the economic impact of the crisis was mitigated.
Rising prices in Saudi Arabia with a 15% VAT
Various factors account for the rising prices in many countries. However, most people agree that they were compelled to buy more expensive products due to a shortage in the supply of products they are used to. Add to that the cost of delivery during the lockdown when businesses were closed, and people weren’t allowed to move around. It’s also worth noting that isolation and remote work during the lockdown resulted in higher electricity bills.
In Saudi Arabia, the value-added tax (VAT) on all products and services rises from 5% to 15%. This came as a blow for the whole population, including expats who are currently facing a salary cut.
What you should expect after the crisis
The COVID-19 crisis will obviously have a long-term impact on the global real estate market. Taking into account current border and travel restrictions and the slowdown of immigration, property prices are dropping quickly, even in countries like Australia, the United Kingdom and the United Arab Emirates. Since the supply looks greater than the demand, governments are providing property investment incentives. Some of these measures are low-interest rates on bank loans, cutting down of service fees, etc. The UK, for its part, is slashing down stamp duty so that young people get the chance to become homeowners. However, the situation is likely to change soon, taking into account the gradual lifting of border restrictions. In many countries, property prices have started rising.
The Netherlands seems to be the only country with a profitable real estate market during the COVID-19 crisis. In fact, an 8.8% price increase in prices was noted during the past few months. The Netherlands has one of Europe’s most in-demand real estate markets. In 2019, the Dutch government implemented measures to increase the number of constructions in major cities in order to meet the growing demand. Currently, a property in the Netherlands costs $ 380,000 on average. In France also, the prices of new homes in big cities like Paris, Marseille, Lyon and Toulouse remained stable during the crisis. On average, prices range from 361,400 euros for a studio to 785,600 euros for a 3-room apartment.